Chairman’s Message A Look to the Future

1. Chairman’s MessageA Look to the Future Herb Yuan POSC Board Chairman Manager SIEP IT & IM Shell International EP 2005 POSC AGM Rice University, Houston, TX

2. Outline • POSC Board Activities in 2005

3. POSC Board in 2005 • David Archer POSC CEO • Peter Bernard  Jon Lewis Landmark • Peter Breunig Chevron • Steve Comstock ExxonMobil • Tom Halbouty Pioneer • Stewart Robinson UK DTI – Vice Chairman • Yogesh Sinha  D.K. Pande ONGC • Ihab Toma Schlumberger • Morag Watson BP • Eldad Weiss Paradigm • Herb Yuan Shell - Chairman

4. 2005 Board Activities • Board Priorities for POSC • Harness WITSML momentum and visibility • Improve standards usability • Production Data Exchange Standards – time to get it moving again • Ensure POSC relevance to member and business needs • Globalization • Jan board meeting in India with 7 board members attending • POSC Asia initiated with Satyam • Strategic Outlook • Gartner report out on: • Case for Standards in the Oil Industry

5. 2005 POSC Scorecard

6. Why POSC? View of a Major • Accelerate development and application of data standards for next generation EP company • Improve data exchange by allowing internal standards to be adopted as industry standards and gain learning therefrom • Share and align priorities on standards across industry • Ease regulatory compliance by maximizing alignment of regulatory standards and industry standards • Utilize POSC as a means of collaboration • Co-create standards with vendor community to improve integration possibilities

7. Why POSC? View of an Independent • Have an impact on what vendors design just like the majors • Improve data standards – Well Curve naming standards is an example • Know upcoming technologies and what larger companies are considering; sometimes they are your partners • Impact standards while working with vendors and industry people so that needed tools are developed to support the new technology • Accelerate application and data standards

8. POSC Relationships Regulatory • Value • Easy, reliable, timely regulatory compliance • More timely data • Regulatory Inputs • Requirements for data transfer to regulatory agency • POSC Outputs • XML - electronic transfer ability tied to vendor apps POSC Majors Independents • Value • Easier data exchange • Major Inputs • Knowledge worker process • Broader testing • POSC Outputs • Something for the entire industry • Value • Ability to impact standards • used by service orgs • Simplified data exchange • Accelerate application of • standards • Independent Inputs • Knowledge, testing • POSC Outputs • Usable standards Service Organization • Value • Software assists in maintaining the standards • Service Organization Inputs • Current conventions and methods • POSC Outputs • Maintain the good but use more current • technology

13. 2005 Board Activities • Exploring synergy with other standards bodies • POSC Caesar, Rescue, . . . • PIDX – PPDM – POSC board to board discussions held • The POSC Board believes that a radical change in approach to developing and implementing upstream oil and gas industry standards is required and this is best achieved by a new single-point organization, encompassing current and future workflow activities and areas covered by PIDX, POSC, and PPDM.  This new body should incorporate an industry strategic approach that can identify the need and value of standards in specific areas, their integration, and quickly deliver, maintain and support them.

14. Synergies with Industry Standards Bodies • Discussions showed opportunity for synergy • Boards and executives have endorsed exploring synergy steps that could lead to a single upstream standards body • PIDX Executive Committee - agreement Oct 25 • Discussions ongoing with PPDM

15. Questions put to and answered by the Boards of POSC, PIDX and PPDM 1. What is the ….. BOD response to the formation of a standards governing body? 2. What functions and authorities does the ….. BOD grant the standards governing body? 3. What constituent organizations does the ….. BOD recommend the standards governing body to include? 4. Who does the ….. BOD recommend sit on the standards governing body? 5. What priority projects or domains does the ….. BOD recommend to start off with? 6. What is the .…. BOD input into governance evolution ? 7. What are the ….. BOD steers on the operating model ? 8. Any other items to be considered ?

16. 7. What are the … BOD steers on the operating model?

17. 2005 Board Activities • Improve standards delivery • More standards are needed for EP business • Improve standards delivery to meet member goals • Increase focus on SIGs; more project-based • lower membership fees; higher SIG fees • New fee structure designed to increase POSC attractiveness for new members. • Management changes • search initiated for new POSC CEO • board agreed that CTO to be interim CEO after December 1.

18. Wrap-up • POSC is changing to meet the needs of industry. • The POSC board wants and expects more from POSC • Your participation is critical: • in SIGs • ensure you let a board member know your views • The industry is committed to make POSC work